1. In this tax revision case filed by the assessee the decision of the Sales Tax Appellate Tribunal holding that a turnover of Rs. 3,11,400 represents inter-State sales effected by the assessee during the assessment year 1979-80 is challenged. The assessee's contention before the Tribunal was that the said turnover represents the assessee's local sales made to the Imperial Textile Waste Company, Madras, that those sales being second sales are not liable to be taxed under the Tamil Nadu General Sales Tax Act and that the transaction cannot be treated as inter-State sales as has been done by the authorities below. The Tribunal, after referring to the terms of the contract entered into between the assessee and the Imperial Textile Waste Company, Madras, has taken the view that since the said contract contemplates movement of the goods outside the State, the sales by the assessee to the Imperial Textile Waste Company, Madras, should be taken to be inter-State sales. The said view of the Tribunal has been challenged in this case. According to the petitioner, the Tribunal is not right in treating the entire turnover of Rs. 3,11,400 as relating to inter-State sales, while in fact the said turnover represents only local sales.
2. The petitioner's case is that the assessee agreed to sell the goods to Imperial Textile Waste Company, Madras, and it is the said buyer who had entered into the contract with a Pondicherry firm for the supply of the goods purchased from the assessee and that the assessee has nothing to do with any inter-State sale as the inter-State sale was effected only by the buying company to the Pondicherry firm. It is also the contention of the learned counsel for the assessee that in this case actually the goods sold by the assessee to the Imperial Textile Waste Company, Madras, was taken delivery of by the representative of the said buyer in Coimbatore against cash payment and thereafter the despatch to Pondicherry was effected by the buyer's representative and the assessee had nothing to do with the despatch of the goods to Pondicherry at all. It is also contended by the learned counsel for the assessee that even if the assessee had despatched the goods to Pondicherry as contemplated by the sale agreement between the assessee and the buyer in Madras the despatch must be taken to have been made by the assessee as an agent of the buyer and therefore the sale in this case should be taken only to be a local sale and not an inter-State sale. To appreciate the above conventions put forward by the learned counsel, the factual position in this case has to be referred to. The assessee had sold cotton waste to the Imperial Textile Waste Company, Madras, who had entered into a contract for the sale of cotton waste to M/s. Pondicherry Papers Limited, Pondicherry. The assessee despatched the goods to Pondicherry Papers Ltd., Pondicherry, as per the instructions of the buyer, the Imperial Textile Waste Company, Madras. The assessee had raised invoice on the buyer whenever goods were despatched and the buyer firm which is at Madras had raised the bills on Pondicherry Paper Limited, Pondicherry, and collected 4 per cent. sales tax and paid the same to the Government. On these facts, the assessing authority felt that since the goods had moved from Coimbatore to Pondicherry in pursuance of the assessee's contract of sale with the Madras firm, the sale is liable to be taxed at 10 per cent. under the Central Sales Tax Act. The said view of the assessing authority has also been affirmed by the appellate authority. According to the petitioner, it is the sale by the Madras firm to the Pondicherry, Papers Ltd., Pondicherry, that should be treated as inter-State sale and not the assessee's sale to the Madras firm. Since the contract of sale is between the Madras firm and the assessee and the goods are delivered at Coimbatore to a common carrier, the assessee's sale should be taken to have been completed at Coimbatore and as such it should be a local sale. It is pointed out by the assessee that the invoices were raised against the Pondicherry Papers Ltd., Pondicherry, only by the Madras firm and not by the assessee and therefore the assessee has nothing to do with the inter-State movement of the goods as the movement of the goods is traceable only to the contract of sale entered into by the Madras firm with the Pondicherry Papers Limited, Pondicherry. It is also pointed out by the learned counsel for the assessee that in the absence of any specific contract, mere movement of the goods from the assessee to Pondicherry dealer cannot constitute an inter-State sale by the assessee. It is also stated in despatching the goods to Pondicherry in pursuance of the contract of sale, the assessee has acted only as an agent for arranging the transport on behalf on the buyer at Madras.
3. The question is whether the assessee's claim that his sales to the extent of Rs. 3,11,400 is a local sale as contended by the assessee or it is an inter-State sale as contended by the Revenue. The sale contract entered into by the assessee with the buyer at Madras dated 27th September, 1979, specifically provides that the assessee will have to arrange to transport the goods by lorry from Coimbatore to Pondicherry showing the Madras buyer as consignor and on 'to pay' basis. Therefore, there is an obligation on the part of the assessee as a seller to arrange for the transport of the goods by lorry from Coimbatore to Pondicherry showing the Madras buyer as consignor. This clause in the sale contract under which it is the obligation of the seller to transport the goods to Pondicherry will clearly attract the definition of inter-State sale in section 3 of the Central Sales Tax Act, 1956. That section says a sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale or purchase occasions the movement of the goods from one State to another. In view of the specific clause in the agreement of sale providing for the transport of the goods from Coimbatore to Pondicherry by the assessee showing the Madras buyer as consignor, the sale between the assessee and the buyer at Madras cannot be said to be complete unless the goods are actually despatched to Pondicherry. Under the sale agreement, the assessee has undertaken the obligation to despatch the goods to Pondicherry, of course, showing the Madras buyer a consignor. Since the sale agreement itself contemplates the movement of the goods from Coimbatore in Tamil Nadu to Pondicherry State, the transaction squarely falls under section 3(a) of the Central Sales Tax Act. We are not inclined to agree with the learned counsel for the assessee that an inter-State sale can take place only between two dealers in two different States. It is possible that even as between dealers in the same State, an inter-State sale can take place. Even if the seller and the buyer are in the same State, the buyer can call upon the seller to deliver the goods outside the State. In such a case, it will be an inter-State sale as it occasions the movement of the goods. In this case, though the assessee and his buyer are in the State of Tamil Nadu, the sale contract between them dated 27th September, 1979, in fact contemplates the movement of the goods from Coimbatore to Pondicherry. It could therefore be taken that it is the contract dated 27th September, 1979, that has occasioned the movement of the goods from Coimbatore to Pondicherry. This will be the position even if there is no subsequent sale by the assessee's buyer to the Pondicherry dealer. This the view taken by the Tribunal in this case.
4. The assessee's alternative case is that the goods were taken delivery by the buyer's agent at Coimbatore and it is he who despatched the goods later to Pondicherry and that the assessee has nothing to do with the despatch of the goods to Pondicherry. But the Tribunal after referring to the materials on record specifically says that there is no delivery taken by the buyer's representative and it is the assessee who had despatched the goods to Pondicherry in pursuance of the specific term to that effect in the contract. We are inclined to agree with the finding given by the Tribunal that the representative of the buyer at Madras did not take actual delivery of the goods at Coimbatore and then despatched the goods to Pondicherry as contended on behalf of the assessee. The said contention that actual delivery was taken at Coimbatore itself by the buyer's representative is contrary to the facts and the agreement entered into between the parties. The agreement specifically provides that it is the assessee who has to despatch the goods to Pondicherry showing the buyer as the consignor. This specific term excludes the possibility of the buyer's representative taking delivery of the goods at Coimbatore and later himself effecting the despatch of the goods to Pondicherry without reference to the assessee. Once the theory of actual delivery having been taken by the representative of the buyer at Coimbatore is ruled out, then we have to proceed on the basis that the goods were despatched to Pondicherry by the assessee in pursuance of the obligation undertaken by the assessee in the contract of sale. The fact that the goods are to be despatched through lorries will not make any difference for the delivery to a common carrier by the seller will be relevant only for section 3(b) and not for the purpose of section 3(a). Under section 3(a) the relevant consideration is to find out whether the sale contract between the assessee and the buyer at Madras occasioned the out of State movement of the goods. In this case, the sale contract specifically provides for the despatch of the goods by the seller to Pondicherry. Even assuming that the despatch of the goods by the seller was on behalf of the buyer, still the movement of the goods can be said to have occasioned on the contract entered into by the assessee with the Madras buyer. In this view of the matter we are inclined to agree with the view taken by the Tribunal that the turnover of Rs. 3,11,400 represents inter-State sales and not local sales. The tax case is therefore dismissed.
5. Petition dismissed.